Correlation Between Kellanova and McCormick Company
Can any of the company-specific risk be diversified away by investing in both Kellanova and McCormick Company at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kellanova and McCormick Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellanova and McCormick Company Incorporated, you can compare the effects of market volatilities on Kellanova and McCormick Company and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kellanova with a short position of McCormick Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and McCormick Company.
Diversification Opportunities for Kellanova and McCormick Company
0.85 | Correlation Coefficient |
Very poor diversification
The 1 month correlation between Kellanova and McCormick is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and McCormick Company Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McCormick rporated and Kellanova is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kellanova are associated (or correlated) with McCormick Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McCormick rporated has no effect on the direction of Kellanova i.e., Kellanova and McCormick Company go up and down completely randomly.
Pair Corralation between Kellanova and McCormick Company
Taking into account the 90-day investment horizon Kellanova is expected to generate 2.81 times less return on investment than McCormick Company. But when comparing it to its historical volatility, Kellanova is 1.58 times less risky than McCormick Company. It trades about 0.06 of its potential returns per unit of risk. McCormick Company Incorporated is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,467 in McCormick Company Incorporated on January 19, 2024 and sell it today you would earn a total of 760.00 from holding McCormick Company Incorporated or generate 11.75% return on investment over 90 days.
| Time Period | 1 Month [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellanova vs. McCormick Company Incorporated
Performance |
| Timeline |
| Kellanova |
| McCormick rporated |
Kellanova and McCormick Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellanova and McCormick Company
The main advantage of trading using opposite Kellanova and McCormick Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, McCormick Company can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in McCormick Company will offset losses from the drop in McCormick Company's long position.| Kellanova vs. Central Garden Pet | Kellanova vs. Central Garden Pet | Kellanova vs. The A2 Milk | Kellanova vs. Altavoz Entertainment |
| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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